Upstream - Marx's Capital Vol. 2 w/ Richard Wolff and Shahram Azhar

Episode Date: July 29, 2025

In our inaugural episode on Marx’s Capital, we took a deep dive into Capital Vol. 1, the first of three volumes on political economy written by Karl Marx in the late 19th century. Capital Vol. 1, though, is just the beginning—and unfortunately most people stop there. But Vol. 1 really just looks at one aspect of capitalism—how surplus value is produced. It doesn’t dive into the entire circulation process—or what we refer to as the circuits of capital. Vol. 2 provides the full picture of how capitalism functions—and we’ve brought on two terrific guests to help us make sense of it all.   Richard Wolff is an economist, Professor Emeritus of Economics at the University of Massachusetts Amherst, currently a Visiting Professor in the Graduate Program in International Affairs of the New School in New York, host of the Economic Update and The Dialectic at Work podcasts, and founder of Democracy at Work.  Shahram Azhar is a political economicst, musician, Associate Professor of Economics at Bucknell University and host of The Dialectic at Work podcast.  In this episode, we talk about the process that went into writing and compiling Marx’s Capital Vol. 2. We talk about how Capital Vol. 2 builds off of Vol. 1, going from an analysis of how surplus is produced in the productive circuit of capital to really looking at the whole process of capital circulation. We talk about capital as a process as opposed to a thing, the various stages it passes through, what the implications are for the concept of the working class, the different antagonisms between the various kinds of capitalists—industrial, merchant, banking—and much more.  Further resources: Democracy at Work The Dialectic at Work Capital Volume Two (marxism.org) Contending Economic Theories: Neoclassical, Keynesian, and Marxian, by Richard D. Wolff and Stephen A. Resnickolff  On the Question of Free Trade Related episodes: Marx's Capital Vol. 1 w/ David Smith Trade Wars and Tariffs w/ Richard Wolf Inflation with Richard Wolff and Dean Baker Dialectical Materialism w/ Josh Sykes Intermission music: Ultrabonus Covert art: Berwyn Mure Upstream is a labor of love — we couldn't keep this project going without the generosity of our listeners and fans. Subscribe to our Patreon at patreon.com/upstreampodcast or please consider chipping in a one-time or recurring donation at www.upstreampodcast.org/support If your organization wants to sponsor one of our upcoming documentaries, we have a number of sponsorship packages available. Find out more at  upstreampodcast.org/sponsorship For more from Upstream, visit www.upstreampodcast.org and follow us on Instagram and Bluesky. You can also subscribe to us on Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts.

Hi everyone, just wanted to let you know that Robbie and I will be taking the first two weeks of August off, so our next public release will be published on August 25th. We've got some really great episodes planned and we're really looking forward to sharing them with you once we're back. Thank you and see you in a few weeks. Volume 2 wants us to understand there are a lot of people in this society who are neither the producers of surplus nor the appropriators of surplus produced by others. They're in a, here we go, different relationship, both with one another and with the producers and appropriators of surplus, because the economy is a bigger totality. Volume 2 shows us all that happens in the way of capital circulating through the economy, locates

the production of surplus in there, but also other things. And it gives you immediately a sense of how the economy works that is much closer to the everyday that we want to understand than Volume One was. You're listening to Upstream. Upstream, Upstream, Upstream. A show about political economy and society that invites you to unlearn everything you thought you knew about the world around you. I'm Della Duncan and I'm Robert Raymond. In our inaugural episode on Marx's Capital, we took a deep dive into Capital Volume 1, the first of three volumes on

political economy written by Karl Marx in the late 19th century. Capital Volume 1 though is just the beginning and unfortunately most people just stopped there. But Volume 1 really just looks at one aspect of capitalism, how surplus value is produced. It doesn't dive into the entire circulation process or what we refer to as the circuits of capital. Volume 2 provides the full picture of how capitalism functions, and we've brought on two terrific guests to help us make sense of it all.

Richard Wolff is an economist, professor emeritus of economics at the University of Massachusetts Amherst, currently a visiting professor in the graduate program in international affairs of the New School in New York, host of the Economic Update and the Dialectic at Work podcast, and founder of Democracy at Work. Shahram Azhar is a political economist, musician, associate professor of economics at Bucknell University and host of the Dialectic at Work podcast. In this episode, we talk about the process that went into writing and compiling Marx's Capital Volume 2. We talk about how Capital Volume 2 builds off of Volume 1, going from an analysis of how surplus is produced in the

productive circuit of capital to really looking at the whole process of capital circulation. We talk about capital as a process as opposed to a thing, the various stages it passes through, process as opposed to a thing, the various stages it passes through, what the implications are for the concept of the working class, the different antagonisms between the various kinds of capitalists, industrial, merchant, banking, and much more. And before we get started, Upstream is almost entirely listener funded. We couldn't keep this project going without your support. There are a number of ways that you can support us financially. You can sign up to be a Patreon subscriber, which will give you access to bi-weekly episodes ranging from conversations to readings and more. Signing up for Patreon is a great way to make Upstream a weekly show and it will also give you access to our entire back catalogue of Patreon episodes, along with stickers and bumper stickers at

certain subscription tiers. Sign up and find out more at patreon.com forward slash Upstream Podcast. And if Patreon's not really your thing, you can also make a tax deductible recurring or one-time donation on our website at upstreampodcast.org forward slash support. Through this support, you'll be helping us keep upstream sustainable and helping keep this whole project going. Post capitalist political education podcasts are not easy to fund. So thank you in advance for the crucial support.

And now, here's Robert in conversation with Richard Wolff and Shahram Azhar. Richard, Shahram, it's a pleasure to have you both on the show. Well, I'm glad to be here. Thank you, Robby. So Richard, Professor Wolf, you've been on the show a number of times now going back to like 2016. So it's like really great to have you back on. I love that you've become a regular guest of the show. Sharam, it's great to have

you here for the first time actually. And so basically I asked you both to join us today because I just recently came across your new podcast that is a theory podcast, which you both co-host. And so this most current season had a lot of really great deep dives into Marx's Capital Volume 2, which we will be discussing that text today on this show. So yeah, just to start before we get into the text itself, maybe tell us a little bit about your new podcast, the Dialectic at Work. So probably the Dialectic at Work, the tagline is that it's a podcast dedicated to understanding Marxian theory.

But that's really just the tagline. What do we really mean by the idea? What's the idea? What's why did we start doing this, et cetera? And it goes back to something that I learned from a book that was written by Professor Stephen Resnick and Professor Richard Wolff. It's called Contending Economic Theories. And that book had a profound impact on me as a graduate student. And the program is quite literally inspired by the ideas that I first encountered in that book. It means something very, very simple, right, for your audiences. We as human beings analyze things in words, in concepts, in categories.

That is to say we need to think in terms of concepts and categorize thought in a particular way. And it turns out, if you read that book, that how we classify and categorize what we see and observe is critical to A, what we see, what is visible and invisible, and B, what the hell we're going to do about it. Because as Hegel pointed out, the appearance of things doesn't always and never corresponds to their inner essence, if you like. So the dialectic at work is precisely that it's an attempt to figure out How and why Marxian categories of thought are what they are?

How Marxian analysts classify? information to tell a rich story about Class power race gender war profits imperialism and all the rest of it so in other words Georgie Lukacs this figure that has inspired generations of thinkers, he said that the Marxian dialectic is not about some kind of intellectual armchair theorizing, but it's a life and death issue. Getting the right concepts and categories of thought is a life and death issue. In other words, I mean, my professors taught me that without revolutionary theory, there can be no revolutionary movement. So the dialectic

at work is an attempt to rethink and reanalyze. By the way, this is something that Professor Rick Wolf and Steve Resnick and his students have been doing for 40 years with rethinking Marxism and maybe we can talk about that as well. But that's broadly speaking the idea. It's trying to bring those 40 years of rethinking Marxism to a wider audience. And so before we get into the actual text of Capital Volume 2 itself, I always love getting like a bit of context about how a text was written.

And we did the same for Capital Volume One. So I'm wondering if you could maybe talk a little bit about what actually went into putting together Capital Volume Two and just give us some information, some context on how it was put together. Okay, let me try a little of that. Before I do, I wanted to add one thing to what Sharam said. The United States, more than anywhere in the world, is now emerging like a bear out of hibernation or a worm out of a cocoon. And that cocoon or that cave is known as the Cold War. It's that period after World War II when the United States and

the Soviet Union suddenly stopped being allies in World War II, which they were, allies not only in the military sense of fighting Germany and Japan, which they did, but also in the sense that people who liked the Soviet Union, who liked Marxism, in part because the Soviet Union defined itself in those terms, could function here in the United States as socialists, as communists, as Marxists. They weren't looked at as dangerous except by the extreme right wing and the extreme right wing didn't have enough power to stop that. But after World War II everything changed.

The defeat of the fascists gave the American business community and the American right wing the possibility of a coalition, of an alliance that would benefit both of them if they could make it effective. And they did. They made it very effective. For the business community, the goal was to destroy the labor movement. People should understand that by 1946, 40 percent, more or less, of the American working class was in a union, and a third of those unions were led by communists. And so this was a challenge. There were big strikes in 1946 and 45, 6, and 7. The workers were determined not to slip back into the depression that had been the 10-year experience before the war, and they were determined to fight, and they knew they were stronger than they had ever been in

American history by a lot. So the business community was terrified. They were terrified by all the progressive social legislation that had been passed in the 1930s under Roosevelt. Social security, unemployment compensation, minimum wage, and a federal jobs program for millions of workers paid for by taxing corporations and the rich. It was a right-wing businessperson's nightmare. And it was capped off by seeing the Soviet Union and the United States as allies in the war. In order to undo all of that, the coalition, the extreme right wing, led by groups like the American Legion and other formations like

that, heavily based in the American South, which was only, you know, not that long ago a slave society, and carried all the legacy that that implied. And so they carried out a purge. And that purge is not over yet. All three of us, in different ways, are products of that purge. So in my case, even though I'm a product of the elite universities of this country, I went to Harvard, then I went to Stanford, and I finished my education at Yale. Ten years of my life in those three institutions. And yet with the one exception of one semester at Stanford, where by a weird collection of coincidences a Marxist professor, Paul Baran, was teaching. With the exception of that one semester, I was

never required to read one word of Karl Marx's capital, not volume one, not volume two, not volume three. As terribly backward as that was, what was worse, even worse, was that most of my teachers were proud of the fact that they had not read and did not know anything about it. The taboo was so severe that you really need to go back to the Middle Ages when people had a taboo, don't touch this kind of tree or else you know the heaven will open and you'll disappear. And we look back on that with a kind of wonderment, I'm convinced that long after I'm gone, people look back on the second half of the 20th century and the early decades of this one as a time of extraordinarily self-imposed ignorance. Those few Americans who, for whatever reason, and by the way, most of the time

I'm talking about people whose parents or grandparents were caught up in the 1930s and 40s and joined the Communist Party or a Socialist Party or found their way into that after the war were busily erasing every trace they could of what they had done as young people but you know your child picks up the things you don't want them to see every bit as well as those you stress for them to see. And so the children carried it. And then in the 1960s they began to rediscover it. And they've been rediscovering it slowly and against the continuing purge ever since. But the few who did found their way to Karl Marx's capital. But among those the vast majority never got beyond volume one.

There are a lot of particular reasons for that. I'm assuming you're not interested in those. And so volumes two and three were neglected. For every Marxist I have met in my life, American, there are 99 who never went beyond volume one, for every one who did. Now as to your particular question, Marx died in 1883, leaving behind many, many notebooks filled with his commentary on two things. Economists before him, people with famous names like Adam Smith or David Ricardo or Thomas Malthus and others, but also notebooks filled with topical commentary on the tendency, for example, of the rate of profit to fall,

or the relationship between wages and prices, or wages and profits, or profits and values. In other words, conceptual notebooks. So it was to his longtime friend and collaborator Engels that he entrusted the work that he wrote Volume 1. That's Marx's writing. And if you read the volumes, you'll see very quickly, Marx's erudition, his ability to move seamlessly from Dante to Shakespeare to illustrate his points, you don't find it comparable in the other volumes. There's some, but not like that. not like that. So basically, long story short, Engels put together the notebooks that comprise volume two, and then when Engels died, their student, one of their leading students, a German activist, Karl Kautsky, put together the third volume. And in so doing they had to make editorial decisions.

Much as if you read Marx's correspondence, he had to make editorial decisions. What of the work he had done goes in volume one. For example, there are many letters where you see Marx agonizing over those early chapters in Volume 1. He had learned from Hegel that the beginning of an argument is always the most difficult to figure out. Where in all of everything that matters, where do you start? How do you enter into an argument when you believe, as Marx did, that everything impacts everything else? It's like being asked, what kind of a person are you? Well, there's so many layers and so many levels and so many influences talk about, it becomes very

revelatory where you start. And it also governs what you say later where you started, whether you're conscious of that or not. So Marx had to make difficult decisions, and now you have to remember it's even more difficult if someone else is trying to figure out what's the proper order of materials from another person's notebooks, and then Kautsky even harder. So for example, many people did not know that Marx understood the relationship between values and prices in a particular way. They didn't understand that he was taken by the fact that both Smith and Ricardo and many others believed that there was something called a tendency for the rate of profit to fall, although they didn't use that language. That's Marx's. Their language was the tendency toward a stationary state, was their language.

It wasn't only a linguistic difference, it was also conceptual. Marx had to work all that out. He did that, but it didn't go in volume one. It could have. Some of us think it should have, but it didn't. And, you know, no one's interested in being a Monday morning quarterback. He did it the way he did it, but he was also under the influence of having discovered, as he worked through his economics, he discovered his own originality. And he was taken, we know that from his correspondence, he was taken with it and began to understand that he was rethinking political economy. He was taking Smith and Ricardo and the others.

Marx is encyclopedic in his knowledge. If you read a work that even fewer Americans ever look at called The Theories of Surplus Value, another three volumes, by the way, not capital, it's a separate book, there you will see there's really only one modern economist that I'm aware of who comes close to Marx's erudition about all the people with whom he disagreed, whose work he studied with a level of care and intention that will blow you away. And that is the professor at Harvard who left just as I arrived as a student. I had been looking forward to study with him a man named Joseph

Schumpeter, who's important. He was a European transposed over here. I believe he was Russian. But other than Schumpeter, nobody has done what Marx did. I'm only underscoring it because it adds another layer of irony to the fact that the American profession, to this day, is proud that it knows nothing at all about this. I have had to learn, as Sharam has as well, I have had to learn their economics, classical political economy, neo-class, the orthodoxy now, Keynesian, a variation on the orthodoxy. I've had to learn all of those. I've had to teach them in multiple universities at both graduate and

Undergraduate level and I've had to interact with my colleagues the American economics establishment I Know what they're talking about and when I start talking about what I'm doing their eyes glaze over and Focus on what is much more interesting, which is their sandwich. Thank you so much for the really incredible sort of history and really tracing through the last century really in order to sort of bring us into the context of Capital Volume 2. I think it's really helpful to hear all of that. So let's get into the text a little bit.

So earlier this year we actually did our first deep dive into Capital Volume 1. Of course we had sort of danced around the text quite a bit over the years, but this was a point-by-point outline and deep dive into Capital Volume One, and it was with David Smith, who authored Marx's Capital Illustrated. And I was always sort of abstractly intending to do follow-up episodes looking into volumes two and three, and I didn't really have, you know, a set date or any ideas in mind, But then when I came across the episodes of yours in the dialectic at work, where you dive into capital volume two, I was like, okay, so we're definitely going to

have to have Richard and, and Shahram come on to talk about volume two because you do such a great job of it. So I'm really glad to have you both here. And yeah, I'd love to just, you know, give people a great job of it. So I'm really glad to have you both here. And yeah, I'd love to just give people a broad sense of what's covered in Capital Volume 2 at first. So Capital Volume 1 is, of course, focused on surplus value and where it comes from. Capital Volume 2 goes beyond that.

So before we get more granular on volume two, I would love it if you could just sort of give us a broad outline of what the focus is of capital volume two and how it builds off of capital volume one. The big word that intrudes on volume two is the word circulation. In other words, what Marx seems to want us to do, or now to be more bibliographically careful, what Engels thought Marx wanted to do was to follow up volume one where you can see how production works, literally how the, use your language Robert, how surplus is produced. Who exactly produces it? What are the conditions?

And who gets the fruit of that production? How is it divided between the one who produces it and the one who gets that portion of it we call the surplus, defining all those terms as they're introduced. But of course, for Marx it was self-evident, we know that from his other writings, including many that have dates earlier than this volume, so we know he had it worked out before. It was never Marx's idea that production is the only aspect of a capitalist economy that we need to understand, or is the only one that others have not understood, anything like that. It is a part of this system. It is a part of this system that needs to be carefully elucidated, and that's what Marx's volume one goal is to do. But now he wants to take the first step of locating the production of surplus in a larger context

within which it occurs, because it is linked, this production of surplus, and quote unquote the class struggle between the producers and the appropriators of the surplus, which Marx takes a lot of time and energy to explain in volume one. Remember the length of the working day and all of that and relative surplus and how the struggle between capital and labor is woven in at every juncture to this peculiar system. You know, it is a way, even though Marx doesn't quite say it there, but it is a way of teaching people that if you organize the production of goods and services in this way, you are building conflict, hostility, rage right into the core of your economic system. And if you have half a brain you

ought to be asking yourself, is that a good idea? It's a little bit like saying every year we have a family picnic and we get together all the branches of the family and we go to this lovely park where we cook hamburgers and hot dogs and whatever it is you enjoy on your picnic. But we are all aware that even though we're a good family, we like each other, we help each other, Uncle John and Aunt Mary hate each other, have always hated each other, and are in a state of continual sniping at one another. Would you establish as the organizing committee of the picnic, those two people know because you'd be putting conflict and tension and difficulty right in the heart of the event. And that would be,

to use a complex term, stupid. Capitalism, in that sense, is stupid. It puts rage, bitterness, hostility, anger, resentment right at the core. And that's what Volume 1 shows you. Shows you where it comes from, how it arises, what its focus is. Takes something that might strike you as arcane, length of the working day and they uses that as a way to illustrate how relentless that struggle has always been and always will be and is today. Very powerful political language,

but it's all woven under the surface. It's not there are remarks here and there, but it's basically woven under the surface. There are remarks here and there, but it's basically built into the analysis. Okay, volume two wants us to understand there are a lot of people in this society who are neither the producers of surplus nor the appropriators of surplus produced by others. They're in a different relationship, both with one another and with the producers and appropriators of surplus, because the economy is a bigger totality. Right away, before I say anything else, lights should go off, because if it's true that there are other people, and if it is the

case as it is, I haven't done it yet, but that those people are working, that they're earning wages, right away the concept of working class has become problematized because you immediately have, wait a minute, one kind of worker who's producing a surplus, another one who isn't. Oh my goodness! Then Marxism cannot be summarized as the story of the struggle between the workers and the bosses. I have no objection to that as a slogan, as a shorthand. As long as you understand, it's a shorthand and it's not a substitute for understanding. Volume 2 shows us all that happens in the way of capital circulating through the economy, literally moving from one form to another, from one person to another, from one function

to another. Locates the production of surplus in there, but also other things. And it gives you immediately a sense of how the economy works that is much closer to the everyday that we want to understand than volume one was. Because that's Marx's way of, not unique to Marx at all, but you start at a place which is very difficult, and then you link that until you get a rich picture. Most of the critiques of Marxism that I've heard by the people who bother to try—remember Remember, I told you most just blow it away. But those who try very often criticize a Marx when they've never even read Volum, and criticize him for not having something to say about merchant activity or banking activity.

He has enormous lengthy treatments of these subjects, and they're quite good, by the way. I mean, they have their failures and their flaws, but they're very good, particularly for that time. But caught up in the purge, caught up in the legacy of the Cold War, all of this passes, because in their circles a critique of Marx that is ignorant of volume two is not going to get you into trouble because your audience shares your ignorance. And so there's no problem. But if you're serious, if you want to deal with this critical approach to capitalism, And look, we've had capitalism for several centuries, and by far the richest, biggest, most international critique is Marx and

Marxists. It behooves you, unless you really can't cope with any criticism, to read that material and then make up your mind as to what you've learned from it, where you would disagree with it, and so on. Awesome. Yeah, thank you so much. And so you teased a lot of things that I'm really excited to dive into deeper with you both, including sort of, like you said, problematizing this idea of the working class thinking of like productive labor and what that constitutes thinking about the different types of capitalists right like merchant industrial banking financial etc. We're gonna get more deeply into that in in a few questions here but. Let me see if i can sort of in my own words summarize a little bit about this like focus of Marx in Capital Volume 2, and then maybe Shahram I'll ask you if you can maybe reflect on what I

share and see if you can add some more like scholarly explanation to it. So in Capital Volume 1, and so in our previous episode on that text, we took quite a bit of time to explain the three stages of the circular movement of capital, right? So listeners will probably recall, hopefully, the MCM prime formula, where M is money, C is a commodity, and M is essentially more money, right? So the idea being under capitalism, the capitalist starts with money, M, which is used to produce a commodity, C, and that commodity is used then to make more money. And the way that the money is increased from M to M prime is through the extraction of surplus value created by the worker in the process of production. So like I mentioned there's three stages or circuits sort of of capital and capital volume one like you shared with us Professor Wolff it talks primarily about one circuit the circuit where the capitalist's capital passes through the process,

and I love sort of this language, right, like passes through the process of production and magically, not so magically, we all know, but increases in value. And like you again mentioned, Professor Wolf, there are two other circuits, the circuit where the capitalist appears as a buyer, it's like where that M first shows up. So that would be M dash C in that formula. And then there's the circuit where C transforms into M prime, where the capitalist returns to the market as a seller. So I think I've got that all right. Let me know, like how you would describe that, what you would add, what you change, and maybe just help explain to us the three circuits of capital and how they interact.

And if you could, I'll throw this one towards you, Shahram. OK, here's the way I wanted to explain it to your audiences. Remember that in one of the earlier prefaces to volume 1 of Capital, Mark says that his aim is to explain how Capital works, what Capital is and how it works. And he discovered that it's all about the surplus, right? So we know that part of the story. Now, let's just take a moment and ask ourselves the following question. How would you respond if your younger brother or a kid, for example, asked you, why does it rain? Right? And in doing so, in trying to explain why it rains, you'll have to explain,

here it goes, the process via which this thing happens. In other words you'll have to explain this thing called evaporation. Then you'll have to explain this thing called condensation. And then you'll have to explain this thing called precipitation. In other words you'll have to explain that son or daughter water exists in, let's do it, three modes, three forms. It sheds and clothes itself with these different forms in order for that process to work. In order for that process to be explained, we have to explain its various moments. Similarly, capital exists in these three moments. Production, commodities and money, which is why there's

three distinct windows via which we can look at this totality and depending on where you draw that line, which particular vantage point you're looking at, you arrive at a different understanding of the totality. But remember, the totality consists in the interconnection between these three moments. Which moments? Imagine the following for a moment. These days, for example, people are aware of this thing called network analysis. Imagine that there's three different kinds of nodes.

There's financial nodes, which supply M or money. There's productive nodes which convert inputs into an output using labor power. And there's retail nodes which sell the produced commodity. Now just look at this particular network and ask yourself the following question. How does each node tie with, connect with, network with, whichever word you like, with the other one? And you'll begin to notice something interesting that only one of these nodes, i.e. the productive nodes, pumps more surplus value out of labor power than it returns to the commodity labor power. In other words there's one deficit node in society i.e. human labor power which produces more

value than what it receives and then once this surplus is pumped out now the remainder of the question is who gets what how is this brotherhood of the bourgeoisie gonna distribute? The surplus that they've extracted from the workers So volume 2 is really trying to explain those two moments Which Marx had abstracted from in volume 1 because there he wanted to explain How via the working day etc surplus was being pumped out, extracted, exploited from the retchard of the earth. So he's abstracting from circulation moment one,

i.e. investing, reinvesting, et cetera, and circulation moment three, i.e. selling the produced commodity. And now in volume two, he begins with that. He says that we abstracted from that in volume one because we wanted to make something else visible. Now we're focusing on these two moments to explain that while these agents participate in the process in the totality of the circuit of capital, they receive distributions, they

don't add new value to the system. And that difference is critical between production and circulation of value. Our analysis and praxie depends crucially on whether we appreciate this idea or not. You're listening to an Upstream Conversation with Richard Wolff and Shahram Azhar. We'll be right back. El nervio A contracolonizar Nos siguen los animales A contracolonizar Al estado de coma

A contracolonizar Más allá del concepto A contracolonizar A contra colonizar A contra colonizar No siguen los animales No siguen los animales That was Contra Colonizacion by Ultra Bonus. Now back to our conversation with Richard Wolff and Shahram Azhar. So maybe just to make things even clearer, can you give us some examples of which capitalists exist in these different circuits? I know we've touched on this a little bit, but there's probably a lot of overlap and separation at the same time. So maybe just give us a sense of how this works in the real world if you want to pluck

out a specific example that might be familiar to people. Alright. Let's deal with that character that Marx calls merchant capitalist. You know, the storekeeper would be a simple way of understanding it. The person whose function in society is to buy objects and to resell them. And to be able to do that such that the price paid to buy it is lower than the price obtained when you sell it. And the merchant is the one who lives off that difference.

So you could describe the merchant with your formula M. M is used to buy commodities, bags of potato chips, and then you resell them but you bought the potato chips at $1 per little bag and you sell it at $1.25 per little bag. And you make 25 cents and you've converted your M, right, a thousand bags at a dollar, that's a thousand dollars, into twelve hundred and fifty dollars when you sell a thousand bags at a dollar and a quarter. So you have made two hundred and fifty dollars income. Your M has gone to M prime through a circuit, that's what volume 2 lays out, the circuit, MCCM'. The C here is almost empty because you've done nothing to the object. You've bought it and you've resold it. So there can be no

question of it gaining value, because if you believe in the labor theory of value, no labor has been done. Nothing has happened to the bag of potato chips that renders it different at the end of this story compared to the beginning of the story. So that means that our capitalist gets the name capital. Remember from volume one, money is capital if and only if it becomes more through whatever process it goes. And we now have a merchant deploying money so that its value expands in the process. So the merchant is deploying money as capital, but no production is going on.

So here we have a capitalist, and if he hires workers to work with him Nothing changes because once again no value has been produced With workers he can move more bags of potato chips than he might have been able to do on his own But that doesn't make a value growth happen That would have to have some production. So we have now defined a capitalist who is not engaged in the appropriation of surplus. Now then, when Marx has done that, he can put the two things together in a way that would not have been sensible earlier. He can put the two things together in a way that would not have been sensible earlier.

He can say to himself, wow, if we look at volume two, and we note as your summary reminded us, that our capitalist who is productive, who hires workers, who produces surplus that he takes, who hires workers who produce a surplus that he takes. He then has at the end of that process, when it's over, he has to convert the commodity the worker produced back into money so that he can reproduce the whole circuit. He can go and buy tools and equipment to replace those he used up, and he can rehire workers, and so forth. So he has to convert finished commodities produced by his laborers back into money. And now he may need to hire workers to do that. You know, we call them salespeople. They constitute a sales department in every corporation. Their job is to go out on the road with a suitcase full of samples of whatever the hell it is the company produces and find buyers. And notice that's a merchant activity because nothing happens. He

doesn't produce anything. He simply markets it. He exchanges it for money. And we're assuming, because Marx does throughout all of this, equal exchange. Not because it's always that way, but because that comes later, what might make it an unequal exchange. And now we can put them together. Mark says the merchant approaches the productive capitalist and says, hey, you're having to take a portion of your surplus you're having to take a portion of your surplus and pay the workers because they don't make anything. They just convert your finished product back into money. And you have to do that to keep going. It's an expense you cannot avoid, but it leaves less for you. And here is where I come in. I'm a merchant. I tell you what I'm going to do. You give me a fee and I will back up to the back of your factory, your workshop, with a truck

twice a week. And I will collect your product. You don't have to have a sales department. You can fire all those workers. You don't have to use your surplus to pay them, or to hire a truck, or anything. I'll take care of everything. And I'll do it at a fee. You're going to have to give me a fee, but my fee is less than what you're pissing away on your sales department. At that point the productive capitalist doesn't want to miss an opportunity. He signs an agreement. And the way the buyer, the merchant capitalist, pays that fee is by getting a discount on the price of the object. That fee is hidden

in that discount. And so the merchant buys all of it at a discount, sells it at its value, and he keeps the difference. That's how the capitalist who is productive—Marx, by the way, uses the term industrial capitalist—that's how he gets connected to, interwoven with a merchant capitalist who's a very different animal, but they need each other. The merchant can't live without the production, and the production can't live without the merchant. They have become intertwined. But Marx's analysis explains all of that, and does it without homogenizing, without losing the specificity of difference between the merchant and the productive capitalist. You don't have to give up the surplus theory.

In fact, it's the surplus theory that enables you to describe how these two different parts of the capitalist system interact. Just in terms of giving you guys an example for this, think about any supply chain. For example, the iPhone, the final commodity, iPhone, probably you got it from Verizon or AT&T, etc. One of these, let's use the word retailers, right? Okay, where did Apple actually get the product manufactured from? In a company called Foxconn China, Qualcomm, Sony provided the glass, child slavery in the Democratic Republic of Congo provided you with the cobalt. You know what I mean?

Okay, so there's different kinds of firms doing different things in this supply chain right let's do another one Walmart or H&M right Bangladeshi women living in on poverty wages produce stitch the clothes that you and I bought bought from a retailer called Walmart Berkshire Hathaway Warren Buffett this amazing person who everyone wants to emulate in the US what is what does his company do Berkshire Hathaway is a holding company it holds other companies that's literally the service that Berkshire Hathaway provides it's a financial holding company that's its role in the circuit of capital. So I

want your audiences to look at these companies just read business news and ask themselves the following question what because it can get complicated right as Steve Resnick and Richard Wolff have pointed out in their books nouns occupy positions right so it's a little difficult to map processes onto positions so for example a company like Starbucks in addition to selling coffee is also sitting on a pile of cash which it invests and gets an interest on right so firms or nouns are participating in multiple processes within the circuit of capital and that's what volume 2 helps us understand. In modern parlance if you

look at any business school and how they teach this stuff to their students that's typically about there's finance right there's procurement there's logistics there's manufacturing and assembly, there's HR, all of the different branches within the circuit of capital. What is M to MOP? In the real world it would be procurement, right? Logistics and procurement. What would be C prime to M prime? Retail. What would be M to labor power? HR, human resource. Where do the goods go once they're produced into an inventory? Right? So, Marx is accounting for inventory costs as well. So, each of those aspects which contemporary supply chain analysts, people who actually

study real businesses, are going to be interested in precisely these questions and Marx is presenting an analysis of a way of thinking about that in the precise, in my view, scientific categories. I know Rick is going to hate me for using that word. No, that is fascinating and I think like together that really does help explain a lot of what Marx and Engels were doing in Capital Volume 2. Richard, I'm going to in a second come back to you to ask you to sort of look at the side of the capitalists because you present a really fascinating example of Walmart in one of the episodes of The Dialectic at Work. So I'm going to ask you about that in a second.

But before that, real quick, Shahram, I want to ask you what I think is kind of a fun question, but maybe, I don't know, we'll see what you think of it. So in terms of, say, the working class, and Richard, you already introduced us to the problematization of the working class that arises from volume two, I'm just going to take a retailer like Walmart, for example, that technically does nothing to produce value. It's just circulating the commodities produced by productive capital. How can we view the employees of Walmart? Are they being exploited in the technical sense

of the term? And also, how do you respond to some of the people out there who would argue that because, say, I'm going to use another example here because it's the one that they generally focus on. Say Starbucks workers. Since they aren't performing productive labor, we can't really include them in the working class and that we

shouldn't include them in our broader liberation struggles. I know that's an extreme side of like how some people take that argument or that position rather, but yeah I'm wondering, Sairam, if you could just kind of walk us through that and explain and maybe clarify anything that I just kind of walk us through that and explain and maybe clarify anything that I might have missed in that example. You see, the distinction between productive and unproductive labor is not a pejorative discrimination between it's a way of accounting for you see in the theories of surplus value Marx points out that the worker who's exploited and produces surplus value, you can be producing under conditions of slavery, and from a capitalist

standpoint, that may not be productive labor. So productive and unproductive is less of a pejorative distinction. It's a bad word, perhaps. It's a bad way of framing it. But it should not be a reason to stop us from developing class solidarity between people who live off the sale of labor power. That's my first kind of intervention that I really want people to understand. It's not a way of discriminating between workers. It's a way of identifying the various class positions that in the real, when you actually try to form a political movement, these questions are going to be important.

For example, what role will the management play when you try to unionize? As you pointed out, for example, Walmart workers. How do we deal with this entire sector? For example, as Rick can point out, of course, a lot better than I can. Some Marxian economists such as Anwar Sheikh, Duncan Foley, etc. argue that this entire sector therefore, and all the workers who work in the retail sector are unproductive workers. But I used to have a discussion with Steve, my former professor and Rick's best friend.

And I asked this question. I said, Steve, what if, for example, a company hires workers who produce an advertising agency, for example, where literally the commodity is advertising services, right? In that particular case, the workers who produce that particular commodity are productive workers. Let's do another one. A security guard, for example, right? The guy who stands outside a factory in Bangladesh, for example, where clothes are being stitched, definitionally

speaking, because the commodity in this particular case is textiles, that security guard is going to be classified, categorized as an unproductive worker. That's changed the model slightly. Now the firm itself, the commodity is security services. And in the division of labor, as a social division of labor goes on in society new firms and new lines of business emerge precisely along those lines. So here's the punch line you cannot deduce from the activity from the verb whether or not it's productive or unproductive labor you can't do that that's an impossibility

you need more information in order to deduce and to make that kind of categorization. But I've already pointed out that this is not and should not be a reason to stop us from establishing class solidarity. That's a different question altogether. Let me add though, because I want to show you that Shahram, it's a different question. He's absolutely right. But here's why Marx is so useful. The category wage earner assimilates and puts together everybody who gets a wage. You can't do that in Marxian theory. I don't mind if you want to use the category wage earner and show me why that's

relevant. I'm perfectly willing to listen. But I know as a Marxist theorist that we've got difference here and it is unsafe for us as theoreticians but also as activists to pretend there's no difference when there is. It's the same mistake as saying wage earner and thinking the difference between the male and the female don't matter, or but older than the young don't matter, or the skilled and the unskilled don't matter, or if you have a racist society the white and the non-white don't matter. That's stupid. You're going to have terrible troubles trying to build a unified working-class movement, which can only be done if you understand, respect,

and take into account the differences. And Marx is here to tell us you better also, in addition to the gender and the race and the age and the skill and all the others, you better take into account whether you're dealing with a worker from whom surplus is taken versus a worker who lives off the surplus produced by another worker. You better take a... By the way, the labor movement has had to struggle with this, but the categories it comes up with are primitive. They are blue collar, white collar. Come on, really? Or educated, college educated.ated, not. That's a little better, but still, wow, you know. And if those are relevant differences, which nowadays virtually everybody admits, then only the ignorance of the Marxian theory makes it impossible to ask the question, how do we unify politically those who produce the surplus

and those who don't, even though they both get wages, they both are abusively treated by bosses, etc. Yeah, no, I really appreciate this, like expanding this concept of the working class and interrogating it from all of these different angles. I think it's really important. And particularly, too, and I don't know if we're going to have time to really get into this too deeply, but just one of the questions that we've been exploring a lot on this podcast

is like identifying revolutionary subjects. And I think that's very relevant to the conversation as well. Professor Wolf, I want to ask you about, so you talked about how you brought up that example early on about the the aunt and the uncle that hate each other. And so one of the things about how capitalism works is it actually pits capitalists against each other in a very interesting way. There's a lot of antagonisms between the different types of capitalists.

And one of the examples that you brought in in the dialectic at work was sort of how Walmart arose and the model that it uses and how it is also, and I'm not using this term now technically, but like exploiting productive capital in a sense. I'm wondering if you can maybe talk about that a little bit for us and explain why it is in capitalism's nature for it to just continuously break down and be an incredibly unstable mode of production. Sure. Before I do that, though, let me start in a different place and get to it. Marx has a famous essay. And again, because people don't take the work seriously, the essay is very not very well known. It has a title, I don't remember the exact title, but something like an essay on free trade.

And it's written around the middle of the 19th century. He's in London and he's asked by a labor union to advise them because they're under a lot of pressure from the big political parties in England who are fighting over free trade versus protectionism. Marx's point, this is not a working class issue. He says, you speaking to the unions, you don't give a crap about this. This is not your issue. He says, you, speaking to the unions, you don't give a crap about this. This is not your issue. There are capitalists who can't compete anymore. They need protection, and that's what they want. And then there are capitalists who need free trade, because that's what serves them. And they're trying to win in the Parliament either to get or to block the

laws that either of them needs. And they know that to win in Parliament it would be helpful if they could line up the working class on one side or the other of this issue. And they're both trying to do it. But you have no business wasting your time. Because they're going to screw you no matter which one of them wins. They're your enemy. Other than a minor interest in what tactical opportunity their fighting might give you, and that's an issue. But to be concerned, to take seriously these arguments, in free trade the workers will be

better off. Bullshit. You know, in protection the workers will be. Look at Mr. Trump. He's protecting autoworkers by blocking, you know, the input of electric vehicles from China, now that China is the producer of the best and the cheapest electric vehicles in the world. So the same thing applies here. And I'll use now Walmart as an example. So Walmart is a mass retailer, which means that what Walmart is in a position to do to do is sell masses of products through its thousands of outlets. Outlets across the United States, outlets around the world. This is a number one or the number one merchant retail outlet. So they then approach productive capitalists all over the world, and they say to them always the same story.

You are a very nice producer of, I don't know, women's handbags, and you produce 5,000 of those here in your shop in Dhaka, or here in your shop in Nairobi, or here in your Brooklyn, it doesn't matter. And you're selling them, but if you work with us, you can hire more people, you can produce many more bags, we will sell them as fast as you produce them, and you will make a lot more profit, because you'll be able to hire a lot more workers whose surplus you will appropriate. Well, the capitalist is overjoyed. He now has a partner. And what does he have to do? Well, I did that a few minutes ago with you. He has to give Walmart a discount. He sells the product to Walmart at a discount from what it's worth, which is worth it to

him because that's less of a loss than he used to expend on having to sell the handbags he produced. So he enters into a deal with Walmart. It goes really well for five or ten years. He quadruples in size. Walmart hands everything and then that day arrives, which you would need a Shakespeare to capture, or a Goethe, or a Dante, or you name it, in which the agent of Walmart arrives and says, we are now selling umpteen thousands of your bags. We will continue to do so, but you have to give us a bigger cut of the action. Okay? We want you to give us more than you have been. In other words, we're going to reduce the difference between the price you pay us

and the value of the product. You don't have to do it. You can go find somebody else. But we're the biggest retailer around. Everybody knows your bags from us. You won't find an equivalent retailer, and it'll take you years. And given all you've invested in being a big producer, you're going to die. Walmart has you. It has you as much as it had you if it had three guns pointed at your nose. And you agree because the alternative is the liquidation of your business, leaving you with debts. Over time, Walmart can begin—and Marx has a line about it— Walmart can begin to require a fee that becomes larger and larger so that, like a parasite, the retail capitalist steals the surplus from the productive capitalist. It's still the productive capitalist who does it, who flagellates his workers to get that

surplus up, but he has to pass it over as fast as he gets it. It's like the tenant here in New York who has to pay such a high rent that the tenant complained, and I hear it every day, I don't work for myself here in the factory where I work. I don't work for myself here in his office. I work for my landlord because as fast as I get it, I have to pass it to him. And that can produce violent hostilities. And here's the way those hostilities work. The productive capitalists, if you push them too far,

will get together to destroy you. And they'll do that in any way they can. If they have antitrust laws in their country, they'll go after you as a monopoly, using their political power to isolate and destroy you. If that doesn't work, they'll blow up your warehouses. you. If that doesn't work, they'll blow up your warehouses. We've had all of that in American history, more than once, and across many, many different fields. Just to add to what Rick is saying, if you just look at the business news and start following antitrust litigation.

Because I've already given the example of the iPhone and Apple, let's stick with that particular company. Consider for example the various kinds of litigation, the class struggles if you like or the conflicts that Apple has been a part of. In 2018, it was Apple versus Samsung, patent rights infringement. Apple versus Qualcomm, patent rights infringement. Another very interesting case that everyone should study is Apple versus Epic Games. Epic Games, the CEO Tim Sweeney or something like that, his argument was that Apple takes, you ready, a 30% cut

every time it sells the app that was designed by Epic Games. And the only service that Apple gives is selling that particular app. And it gets 30% on that particular, Apple versus Epic Games. Another brilliant example of the same. Another one, you're going to enjoy this one if you're interested in the world capitalist system. The DRC, the Democratic Republic of Congo, filed a complaint, and this is a criminal complaint against Apple in December of 2024 against Apple's subsidiaries in France and Belgium. So you see where this is going, right? Let's do another one. All

of these struggles become visible from within the world of Volume 2. And we can extend it to the global scale. For example, when tax discussions take place between sovereign countries, right? BRICS countries are arguing, for example, India's position is that we deserve a greater share of the value chain. Why? Because we have 1 billion people, we sell those things. China says, well, we make the thing. Vietnam has a similar position.

You see what I'm saying? So the positions taken by firms depend on their vantage points in the circuit of capital. And if you look at countries and the representatives of those countries in debates in the WTO, for example, the same class struggles, because remember those governments are representatives of different class coalitions in their respective countries. They go and articulate that particular case at the highest level.

So if you understand the conceptual arsenal of volume two, these class and national struggles will immediately become visible for you. Yeah, that's very fascinating. I hadn't thought about it at all in that context of like the global capitalist system. So we just have a few minutes left here. So I want to ask, why is capital volume too crucial for us to understand how capitalism works? Why is Capital Volume 2 crucial for us to understand how capitalism works? Why is it a mistake to stop at Volume 1? And then just to bundle this into that question as well and give a little preview for people for the future, for our listeners, where does Capital Volume 3 go?

How does it sort of launch off from what is presented in Capital Volume 2? And why is it important for us to also understand Capital Volume 3 as well? The way I tell my students, Volume 2 is to see how capital circulates around from productive to other forms of capital. As I said before, puts it in a larger context. Volume 3 continues that, elaborates the context, but with a particular focus on how the surplus is distributed. To whom do the capitalists who appropriate the surplus, given how it circulates, to whom is it distributed? How is it divided up? Why is it divided up that way? How do you now understand the merchant, the banker, the landlord, the manager? By the way, all of them are treated, in volume three particularly.

How do you understand how they get a cut of the surplus? And how does the receipt of that share of the surplus tie them in to the overall capitalists? In other words, how do you account for all the different positions other than producing and appropriating the surplus. Not as a substitute, but how are they interconnected with one another is the focus of what he's trying to do. And that is because Marx was committed, contrary to the caricatures, he was committed to helping the working class of his time make a successful revolution in order to go beyond the surplus story, the core exploitation of this system, the craziness of putting aunt and uncle who hate each other together in the core of the production of goods and services, which is

nuts, which is why we're going to have endless fighting and endless sabotage and endless explosions and on and on and on. He wants to teach us, look, here's how all of the big players in this system, here's how they fit in. You're going to have to deal with this. Whatever system you put in place, you're going to have to understand, okay, you're going to have a different way of producing an appropriating surplus, because you understand that's the core issue. But now you're going to understand you have to to enrobe your new system in a set of connections with others that sustain it. Or to use our language, you need to be worried about the conditions which will over-determine the perpetuation of the alternative to capitalism. Otherwise, you will make a revolution and in five years you'll lose it

because you haven't provided the support. Part of what capital does is show you how crucial Walmart has been. And by the way, not just to the American, but if you want irony, China. There is no China. I mean I don't want to take away from the Chinese. They've achieved extraordinary things and deserve everyone's admiration for that. But it's unthinkable to have a China because it could produce from here to tomorrow. It couldn't distribute. Walmart did that for them. Walmart went to the Chinese the way it did with the example I gave you before.

Only the Chinese understood the game, and so Walmart can't play anymore. But Walmart went, and that enabled China's development. You have to have supporting institutions, otherwise you're not going to do it. The notion that if you make the revolution it will produce all of its supports is a fantasy. Nothing can do that. That's the problem. And you have to therefore, that was Marx's assumption. And by teaching us how it works in capitalism, he's giving us invaluable hints about the kinds of things we're going to have to do in socialism to make that a viable system enduring over time. Last point, we didn't get to it, but in the latter parts of volume two there is a demonstration

of the relevance of time, what Marx there calls the turnover. And see, it is important on 10 different levels. First, here is Marx showing you how time affects two things, the production and distribution of surplus on the one hand, and he is beginning what he finishes in volume three to show you finishes in volume three to show you that the different times of turnover will produce a divergence of the price of something from the value. That time redistributes the surplus from those who produce and appropriate it to others under certain circumstances. It's just brilliant because it shows you how he can avoid any problem of time. I don't have the time here, but many of the critiques of Marx are about values and prices

not being translatable into another with some arithmetic formula. And of course that's in part because time is a crucial factor here. The time of production versus the time of circulation, and he makes that distinction very systematically in this volume, but it shows you how time matters, and it shows you how and why prices different from values do not invalidate the labor theory of value. Not at all. They are an extension of it. Absolutely.

I agree with the course. I learned it from him. So I just wanted to say that why should we read capital, right? You should read capital to understand how capitalism works. And regardless of, and I say this because I teach a lot of rich kids as well, regardless of whether you want to make a lot of money, make a lot of capital or use this knowledge to abolish capital is your particular choice. But you have to understand how our modern economy works. For example,

think about it. Consider something like infrastructural development in Africa. What exactly does infrastructural development do? What role does it play in the circuit of capital? It brings down the turnover time. What kind of turnover time? The circulation time, look at the Amazon business model, what are they selling, the two-day delivery system, right, what is H&M promise, a short let's use the word this is this is actual business language Rabi, the lead time, this is the actual language that businesses use to describe the efficiency and workings of their

particular setup right of course neoclassical economics has absolutely no clue about these issues and the other one look at the one that Rick talked about fixed versus circulating capital just think about it right or even think about the time that it takes for for example I was trying to explain this to my nine-year-old son the other day right he was like when we get bread from the market we typically consume it in two or three days right when we get a toaster in contrast that lasts for a couple of years or five years you see the difference and it's gonna matter to the capitalist who's making the toaster

versus the capitalist who's making the bread, how long it takes for the turnover rate to, you know what I mean? How long it takes for Amazon to deliver a particular product to my place. All of these issues are of importance, critical importance to the real business world. And anyone who really wants to understand, so that's the second reason.

Third reason is to understand, and Rick explained this brilliantly in our episode that was uploaded on volume two recently. I had never thought of this. The arguments in volume two, the discussion in volume two really helps us understand and it in a way preempts the ideological and apologetic views of profit. For example, one person is going to tell you, well, it's all about risk and return.

What is that? That's looking at the project from the standpoint of M, money capital, the finance capitalist. Another one is going to tell you, well, I got this for five bucks. I sold it for seven. This is the so-called markup theory of profit. And Engels actually addresses it right in the preface of volume 2 he criticizes a bunch of people who criticizing Marx blah blah blah right and he's defending

him against he goes back to James to it it's a beautiful discussion over there so volume 2 is really going to provide Marxist thinkers analysts as well as activists on the field with the polemics, with the conceptual arsenal to defeat and argue against what Marx called in the theories of surplus value the apologetic accounts of the relation between capital and labor power. Literally that's what he calls them the apologetic accounts. Risk theory of profit, markup theory of profit, entrepreneurial genius of Mark Zuckerberg

and all the rest of it. These are all apologetic accounts of profit and Volume 2 is going to provide you with the conceptual arsenal to defeat each of these arguments. You've been listening to an Upstream Conversation with Richard Wolff and Shahram Azhar. Richard Wolff is an economist, professor emeritus of economics at the University of Massachusetts Amherst, currently a visiting professor in the graduate program in international affairs of the New School in New York, host of the Economic Update and the Dialectic at Work podcast, and founder of Democracy at Work.

Shahram Azhar is a political economist, musician, associate professor of economics at Bucknell University and host of the Dialectic at Work podcast. Please check the show notes for links to any of the resources mentioned in this episode. Thank you to Ultra Bonus for the intermission music and to Berwyn Muir for the cover art. Upstream theme music was composed by Robert. Upstream is almost entirely listener funded. We couldn't keep this project going without your support. There are a number of ways that you can support us financially. You can sign up to be a Patreon subscriber, which will give you access to bi-weekly episodes

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